Abstract

Whether capital is efficiently allocated between urban and rural China can have a profound implication for both production efficiency and distributive equity. However, there is little empirical evidence and analysis of rural-urban capital misallocation in China. This paper attempts to fill this gap. We find that on average marginal product of capital tends to be lower in urban areas, indicating that rural areas face a shortage of capital. Further, we find that rural-urban MPK differences are largely due to MPK differentials across state-owned enterprises in rural and urban areas.

About the Speaker

Kent Deng is professor of economic history at the London School of Economics. Furthermore, he is Director of China in Comparative Perspective Network (CCPN) and Co-Director of the Confucius Institute for Business London (CIBL) at LSE; and is also a Fellow of the Royal Historical Society (FRHistS) and Secretary of the "History and Economic Development Group", UK. Professor Deng research interests and writing includes the rise of the literati in the economic life of pre-modern China; the maritime economic history of pre-modern China; the economic role of the Chinese peasantry.